Yet another tax question....

[bjt 0]

Hey Folks,

This morning, I've been trying to figure out how to go about doing up our taxes this year (joint v. separate), and I had a few questions, even after going through Gimy's post (thanks, Gimy! ). First things first, I'm the USC, and my wife Almira is an NRA, although we can treat her as a resident alien by signing a statement saying that she wants to be treated as such. She worked in Kazakhstan for the first half of the year, and then quit her job and moved to the U.S. in August, and hasn't been able to work yet 9no EAD yet.)

Anyway, our options and their associated problems as I understad them, are:

1) Treat her as a RA, file jointly. To do this, though, we need to somehow get her tax records from Kazakhstan. The problem with this is that the system there doesn't have tax returns as we know them in the U.S.--there, the govt. takes your tax money, and doesn't return anything. Because of this, there are no forms for individuals stating things like wages earned and taxes taken. What could we provide as proof to the IRS, if they request it? Would an official letter on company letterhead be sufficient? Also, we probably will need to get stuff translated, and we need to know what qualifies as a "certified translation" under this IRS's "Revenue Ruling 67-308 in Cumulative Bulletin 1967-2".

2) Treat spouse as NRA. According to Gimy's post, I'll probably need to file as "Married, file separately". Under this option, my understanding is that Almira wouldn't have to file a U.S. return since she has no U.S. income. However, I can't claim her as a dependent, since she isn't a resident of the U.S., Canada, or Mexico. Is this correct?

I'm thinking that (1) is the better option, since we'll get more dedections, although since I didn't make so much last year (~$17k), I'd still expect to get back a good chunk of the taxes I paid for 2005.

Thanks for your help in advance!

--Ben.

[chuckandkim 0]

Hey Folks,

This morning, I've been trying to figure out how to go about doing up our taxes this year (joint v. separate), and I had a few questions, even after going through Gimy's post (thanks, Gimy! ). First things first, I'm the USC, and my wife Almira is an NRA, although we can treat her as a resident alien by signing a statement saying that she wants to be treated as such. She worked in Kazakhstan for the first half of the year, and then quit her job and moved to the U.S. in August, and hasn't been able to work yet 9no EAD yet.)

Anyway, our options and their associated problems as I understad them, are:

1) Treat her as a RA, file jointly. To do this, though, we need to somehow get her tax records from Kazakhstan. The problem with this is that the system there doesn't have tax returns as we know them in the U.S.--there, the govt. takes your tax money, and doesn't return anything. Because of this, there are no forms for individuals stating things like wages earned and taxes taken. What could we provide as proof to the IRS, if they request it? Would an official letter on company letterhead be sufficient? Also, we probably will need to get stuff translated, and we need to know what qualifies as a "certified translation" under this IRS's "Revenue Ruling 67-308 in Cumulative Bulletin 1967-2".

2) Treat spouse as NRA. According to Gimy's post, I'll probably need to file as "Married, file separately". Under this option, my understanding is that Almira wouldn't have to file a U.S. return since she has no U.S. income. However, I can't claim her as a dependent, since she isn't a resident of the U.S., Canada, or Mexico. Is this correct?

I'm thinking that (1) is the better option, since we'll get more dedections, although since I didn't make so much last year (~$17k), I'd still expect to get back a good chunk of the taxes I paid for 2005.

Thanks for your help in advance!

--Ben.

Hi Ben,

I file for Kim and I "married jointly" NRA. I won't be entering her W-2 or any income prior to her arrival here in the US. WHY? She wasn't married to me until JUNE 2005, as far as I know the IRS can not tax someone who isn't a residence of the US during the prior tax year, and only taxable the amount of income the individual earns in the duration of his/her present in the States.

Kim wasn't married to me before June 2005, wasn't a residence until June 2005. How could they TAX her?

Am I wrong?

[john_and_marlene 162]

Hi Ben,

I file for Kim and I "married jointly" NRA. I won't be entering her W-2 or any income prior to her arrival here in the US. WHY? She wasn't married to me until JUNE 2005, as far as I know the IRS can not tax someone who isn't a residence of the US during the prior tax year, and only taxable the amount of income the individual earns in the duration of his/her present in the States.

Kim wasn't married to me before June 2005, wasn't a residence until June 2005. How could they TAX her?

Am I wrong?

It depends on what country you are from. Some countries have tax agreements with the U.S. I'm sure some of the UK posters are painfully aware.

[bjt 0]

I file for Kim and I "married jointly" NRA. I won't be entering her W-2 or any income prior to her arrival here in the US. WHY? She wasn't married to me until JUNE 2005, as far as I know the IRS can not tax someone who isn't a residence of the US during the prior tax year, and only taxable the amount of income the individual earns in the duration of his/her present in the States.

Kim wasn't married to me before June 2005, wasn't a residence until June 2005. How could they TAX her?

Am I wrong?

I don't think they can tax her if she claims to be a NRA, and has no U.S. income. However, I don't think you can file jointly if she is claiming to be a NRA. She gets claimed as a deduction on your taxes if you file jointly.

--Ben.

[Yodrak 7]

Ben,

If your wife does not qualify as a US resident for tax purposes, and is not required to file a US tax return for 2005, you do have the choice you mention of chosing to have her be a resident for tax purposes which subjects her workd-wide income to taxation by the USA. My wife was in this situation for 2 years, and like your wife she had no formal records of her income available from either her employer of her government.

What we did was this - based on her bank statements, where she deposited her salary and commission checks, we estimated what we thought her income must have been. For documentation we simply submitted our hand-written worksheets. We were very generous with our estimate, and quite likely over-estimated, but so what? The income we declared for her was very handsome by her country's standards, but so far below the $78,000 foreign-earned income exclusion limit then in effect that she would have had to earn several multiples of the amount we declared before the IRS would be able to tax any of it - hardly worth an audit.

One can't claim their spouse as a dependent no matter where they live.

Yodrak

Hey Folks,

This morning, I've been trying to figure out how to go about doing up our taxes this year (joint v. separate), and I had a few questions, even after going through Gimy's post (thanks, Gimy! ). First things first, I'm the USC, and my wife Almira is an NRA, although we can treat her as a resident alien by signing a statement saying that she wants to be treated as such. She worked in Kazakhstan for the first half of the year, and then quit her job and moved to the U.S. in August, and hasn't been able to work yet 9no EAD yet.)

Anyway, our options and their associated problems as I understad them, are:

1) Treat her as a RA, file jointly. To do this, though, we need to somehow get her tax records from Kazakhstan. The problem with this is that the system there doesn't have tax returns as we know them in the U.S.--there, the govt. takes your tax money, and doesn't return anything. Because of this, there are no forms for individuals stating things like wages earned and taxes taken. What could we provide as proof to the IRS, if they request it? Would an official letter on company letterhead be sufficient? Also, we probably will need to get stuff translated, and we need to know what qualifies as a "certified translation" under this IRS's "Revenue Ruling 67-308 in Cumulative Bulletin 1967-2".

2) Treat spouse as NRA. According to Gimy's post, I'll probably need to file as "Married, file separately". Under this option, my understanding is that Almira wouldn't have to file a U.S. return since she has no U.S. income. However, I can't claim her as a dependent, since she isn't a resident of the U.S., Canada, or Mexico. Is this correct?

I'm thinking that (1) is the better option, since we'll get more dedections, although since I didn't make so much last year (~$17k), I'd still expect to get back a good chunk of the taxes I paid for 2005.

Thanks for your help in advance!

--Ben.

[Yodrak 7]

Chuck,

If Kim was in the USA for 183 days or more in 2005, and she may have been if she entered and took up residence in June, then she is a resident alien for tax purpose and she is subject to US taxation on her world-wide income for 2005. See Publication 519, Chapter 1.

She is also eligible to take an exclusion of her foreign earned income up to the allowable limit, which would probably be something just under $40,000 in Kim's case. But, as a resident alien for tax purposes, she does need to report her income and then exclude it. Or, if a tax treat trumps the foreign-earned income exclusion, go by the terms of the treaty.

Yodrak

Hi Ben,

I file for Kim and I "married jointly" NRA. I won't be entering her W-2 or any income prior to her arrival here in the US. WHY? She wasn't married to me until JUNE 2005, as far as I know the IRS can not tax someone who isn't a residence of the US during the prior tax year, and only taxable the amount of income the individual earns in the duration of his/her present in the States.

Kim wasn't married to me before June 2005, wasn't a residence until June 2005. How could they TAX her?

Am I wrong?

[bjt 0]

Yodrak,

Thanks for the suggestions. I am wondering, though, how you can claim the foreign earned income exclusion (FEIE), unless your wife lived in her home country during the entire tax year. In reading Publication 54, it seems that if she lived in the U.S. for any period of time, and came on a marriage-based visa, she couldn't claim to be a bona fide resident of her country for that tax year.

Wait a sec.... I think I figured this out after looking at your timeline. You were able to file jointly and claim the credit for 2003, since you were married that year, but she didn't travel to the U.S. until '04. The period from Jan '04 to the time she arrived that year, she could still claim residence in her home country for that part of the year.

--Ben.

Ben,

If your wife does not qualify as a US resident for tax purposes, and is not required to file a US tax return for 2005, you do have the choice you mention of chosing to have her be a resident for tax purposes which subjects her workd-wide income to taxation by the USA. My wife was in this situation for 2 years, and like your wife she had no formal records of her income available from either her employer of her government.

What we did was this - based on her bank statements, where she deposited her salary and commission checks, we estimated what we thought her income must have been. For documentation we simply submitted our hand-written worksheets. We were very generous with our estimate, and quite likely over-estimated, but so what? The income we declared for her was very handsome by her country's standards, but so far below the $78,000 foreign-earned income exclusion limit then in effect that she would have had to earn several multiples of the amount we declared before the IRS would be able to tax any of it - hardly worth an audit.

One can't claim their spouse as a dependent no matter where they live.

Yodrak

Edited February 1, 2006 by bjt

[Yodrak 7]

Ben,

Right. And for 2004 we based the 'physical presence' test for the foreign-earned income exclusion on the 12-month period ending on her date of entry. So under the 'physical presence' test for being a resident alien, she was a resident alien for tax purposes based on more than 183 days in the USA. But, under the 'physical presence' test for foreign-earned income exclusion, she was not in the USA for a full 365 days, thereby qualifying for the exclusion.

Yodrak

Yodrak,

Thanks for the suggestions. I am wondering, though, how you can claim the foreign earned income exclusion (FEIE), unless your wife lived in her home country during the entire tax year. In reading Publication 54, it seems that if she lived in the U.S. for any period of time, and came on a marriage-based visa, she couldn't claim to be a bona fide resident of her country for that tax year.

Wait a sec.... I think I figured this out after looking at your timeline. You were able to file jointly and claim the credit for 2003, since you were married that year, but she didn't travel to the U.S. until '04. The period from Jan '04 to the time she arrived that year, she could still claim residence in her home country for that part of the year.

--Ben.

Ben,

If your wife does not qualify as a US resident for tax purposes, and is not required to file a US tax return for 2005, you do have the choice you mention of chosing to have her be a resident for tax purposes which subjects her workd-wide income to taxation by the USA. My wife was in this situation for 2 years, and like your wife she had no formal records of her income available from either her employer of her government.

What we did was this - based on her bank statements, where she deposited her salary and commission checks, we estimated what we thought her income must have been. For documentation we simply submitted our hand-written worksheets. We were very generous with our estimate, and quite likely over-estimated, but so what? The income we declared for her was very handsome by her country's standards, but so far below the $78,000 foreign-earned income exclusion limit then in effect that she would have had to earn several multiples of the amount we declared before the IRS would be able to tax any of it - hardly worth an audit.

One can't claim their spouse as a dependent no matter where they live.

Yodrak

[Mr. Big Dog 10,747]

We had no records of Nani's foreign earnings or taxes withheld/paid overseas whatsoever. That kind of stuff simply doesn't exist there. We just declared what she made and since that was much less than what was exempt from US taxation due to her bona-fide overseas residency, we never had to worry about providing any proof as to what taxes she paid over there. The income we declared in a simple written and signed statement using the average exchange rate from oanda.com.